February 2010 – Page 2 – artdiamondblog.com

Socialist Chávez Quashes Free Speech in Venezuela

Here is evidence of the continuing relevance of Hayek’s The Road to Serfdom:

(p. A5) CARACAS, Venezuela (AP) — A cable television channel that has been critical of President Hugo Chávez was taken off the air on Sunday after defying new government regulations requiring it to televise some of Mr. Chávez’s speeches.

Venezuelan cable and satellite television providers stopped transmitting the channel, Radio Caracas Television, after it did not broadcast a speech by Mr. Chávez on Saturday at a rally of political supporters.
. . .
. . . the cable channel, known as RCTV, said the telecommunications agency “doesn’t have any authority to give the cable service providers this order.” It said in a statement, “The government is inappropriately pressuring them to make decisions beyond their responsibilities.”
The channel switched to cable in 2007 after the government refused to renew its license to broadcast on the regular airwaves.

For the full story, see:
THE ASSOCIATED PRESS. “Cable TV Station Critical of Chávez Is Shut Down.” The New York Times (Mon., January 25, 2010): A5.
(Note: the online version of the article has the date January 24, 2010.)
(Note: ellipses added.)

Reference for Hayek book:
Hayek, Friedrich A. Von. The Road to Serfdom. Chicago: Univ of Chicago Press, 1944.

When the Green Pedalers Went Home, the Grid Powered the Christmas Tree

“The pedal-powered Christmas tree at City Hall Square.” Source of caption: the print version of the WSJ article quoted and cited below. Source of photo (which appeared in the print, but not the online, version of the WSJ article quoted and cited below): http://www.chriskeam.com/blog/uploaded_images/Copenhagen-Xmas-tree-792971.jpg

(p. A16) Copenhagen has splashed out on every kind of green widget to shore up its environmental credentials as host of the world’s biggest climate change conference in years. Most of the emissions-free wizardry is familiar, such as electric cars. Here’s one you may not have seen yet: An extra “green” Christmas tree.

At the Danish capital’s City Hall Square, 15 to 20 volunteers can sit on stationary bikes located around a massive, decorated tree and pedal away to keep it light, at least during the day. The bikes are connected to electrical tie-ups that ultimately power hundreds of lights on the tree.
. . .
Late at night, the big tree continues to sparkle–but thanks to traditional power outlets, not pedal power–once the volunteers have gone home.

For the full story, see:
Spencer Swartz. “Copenhagen Dispatches: Pedal Power: Copenhagen Lights Christmas Tree With Bikes.” The Wall Street Journal (Weds., December 16, 2009): A16.
(Note: the title of the online version of the article is “Pedal Power: Copenhagen Lights Christmas Tree With Bikes” and is dated December 15, 2009.)
(Note: ellipsis added.)

Scientist Helped Kroc Learn Secret of McDonald’s French Fries

One recurring puzzle is the role, if any, for science in innovative entrepreneurship. The episode chronicled below provides one piece of evidence:

(p. 71) I had explained to Ed MacLuckie with great (p. 72) pride the McDonald’s secret for making french fries. I showed him how to peel the potatoes, leaving just a bit of the skin to add flavor. Then I cut them into shoestring strips and dumped them into a sink of cold water. The ritual captivated me. I rolled my sleeves to the elbows and, after scrubbing down in proper hospital fashion, I immersed my arms and gently stirred the potatoes until the water went white with starch. Then I rinsed them thoroughly and put them into a basket for deep frying in fresh oil. The result was a perfectly fine looking, golden brown potato that snuggled up against the palate with a taste like . . . well, like mush. I was aghast. What the hell could I have done wrong? I went back over the steps in my mind, trying to determine whether I had left something out. I hadn’t. I had memorized the procedure when I watched the McDonald’s operation in San Bernardino, and I had done it exactly the same way. I went through the whole thing once more. The result was the same–bland, mushy french fries. They were as good, actually, as the french fries you could buy at other places. But that was not what I wanted. They were not the wonderful french fries I had discovered in California. I got on the telephone and talked it over with the McDonald brothers. They couldn’t figure it out either.

This was a tremendously frustrating situation. My whole idea depended on carrying out the McDonald’s standard of taste and quality in hundreds of stores, and here I couldn’t even do it in the first one!
I contacted the experts at the Potato & Onion Association and explained my problem to them. They were baffled too, at first, but then one of their laboratory men asked me to describe the McDonald’s San Bernardino procedure step-by-step from the time they bought the potatoes from the grower up in Idaho. I detailed it all, and when I got to the point where they stored them in the shaded chicken-wire bins, he said, “That’s it!” He went on to explain that when potatoes are dug, they are mostly water. They improve in taste as they dry out and the sugars change to starch. The McDonald brothers had, without knowing it, a natural curing process in their open bins, which allowed the desert breeze to blow over the potatoes.
With the help of the potato people, I devised a curing system of my own.

Source:
Kroc, Ray. Grinding It Out: The Making of McDonald’s. Chicago: Henry Regnary Company, 1977.
(Note: ellipsis in original.)

Senile Mice Benefit from Cellphone Radiation

“Mice seem to reap cognitive benefits from cellphone electromagnetism.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. D4) Alzheimer’s and Cell Phones: Radiation associated with long-term cellphone use appears to protect against and reverse Alzheimer’s-like symptoms in mice, according to a study in the Journal of Alzheimer’s Disease. Mice genetically engineered to develop brain impairments similar to Alzheimer’s in humans were divided into two groups. One group was exposed twice daily to hour-long electromagnetic fields akin to those created during cellphone use. Mice in the other group were not exposed to the radiation. After seven months, young mice in the first group fared significantly better on cognitive tests than their unexposed littermates. Older mice, which had already developed symptoms of Alzheimer’s, exposed to the radiation for eight months in a subsequent experiment also performed better than older nonexposed mice. Mice, younger and older, not engineered to develop Alzheimer’s also appeared to benefit from the radiation. Biopsies suggested such exposure might fight Alzheimer’s by inhibiting the buildup of certain protein plaques in the brain, the researchers said.

For the full story, see:
JEREMY SINGER-VINE. “RESEARCH REPORT; NEW MEDICAL FINDINGS; Cellphone Radiation Aids Sick Mice.” The Wall Street Journal (Tues., JANUARY 12, 2010): D4.

“Conservation Is About Managing People,” Not Wildlife

(p. C27) People are hard-wired to be fearful of large carnivores. What’s more, it’s hard for the poor to see the economic advantage of rewilding. Humans don’t like conservationists telling them what they can and can’t do with the land that surrounds them. As one conservationist counterintuitively points out to Ms. Fraser: “Conservation is about managing people. It’s not about managing wildlife.”

For the full review, see:
DWIGHT GARNER. “Books of The Times; Conservation as a Matter of Managing People.” The New York Times (Fri., January 22, 2010): C1 & C27.
(Note: the online version of the article is dated January 21, 2010.)

The book under review, is:
Fraser, Caroline. Rewilding the World: Dispatches from the Conservation Revolution. New York: Metropolitan Books, 2009.

“The Bus — La Guagua — Always Comes for Those Who Wait”

“Carmen Herrera in her Manhattan loft, surrounded by her art. She sold her first work in 2004.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Under a skylight in her tin-ceilinged loft near Union Square in Manhattan, the abstract painter Carmen Herrera, 94, nursed a flute of Champagne last week, sitting regally in the wheelchair she resents.

After six decades of very private painting, Ms. Herrera sold her first artwork five years ago, at 89. Now, at a small ceremony in her honor, she was basking in the realization that her career had finally, undeniably, taken off. As cameras flashed, she extended long, Giacomettiesque fingers to accept an art foundation’s lifetime achievement award from the director of the Walker Art Center in Minneapolis.
Her good friend, the painter Tony Bechara, raised a glass. “We have a saying in Puerto Rico,” he said. “The bus — la guagua — always comes for those who wait.”
And the Cuban-born Ms. Herrera, laughing gustily, responded, “Well, Tony, I’ve been at the bus stop for 94 years!”
Since that first sale in 2004, collectors have avidly pursued Ms. Herrera, and her radiantly ascetic paintings have entered the permanent collections of institutions like the Museum of Modern Art, the Hirshhorn Museum and the Tate Modern. Last year, MoMA included her in a pantheon of Latin American artists on exhibition. And this summer, during a retro-(p. 29)spective show in England, The Observer of London called Ms. Herrera the discovery of the decade, asking, “How can we have missed these beautiful compositions?”
In a word, Ms. Herrera, a nonagenarian homebound painter with arthritis, is hot. In an era when the art world idolizes, and often richly rewards, the young and the new, she embodies a different, much rarer kind of success, that of the artist long overlooked by the market, and by history, who persevered because she had no choice.
“I do it because I have to do it; it’s a compulsion that also gives me pleasure,” she said of painting. “I never in my life had any idea of money and I thought fame was a very vulgar thing. So I just worked and waited. And at the end of my life, I’m getting a lot of recognition, to my amazement and my pleasure, actually.”
. . .
But Ms. Herrera is less expansive about her own art, discussing it with a minimalism redolent of the work. “Paintings speak for themselves,” she said. Geometry and color have been the head and the heart of her work, she added, describing a lifelong quest to pare down her paintings to their essence, like visual haiku.
Asked how she would describe to a student a painting like “Blanco y Verde” (1966) — a canvas of white interrupted by an inverted green triangle — she said, “I wouldn’t have a student.” To a sweet, inquiring child, then? “I’d give him some candy so he’d rot his teeth.”
When pressed about what looks to some like a sensual female shape in the painting, she said: “Look, to me it was white, beautiful white, and then the white was shrieking for the green, and the little triangle created a force field. People see very sexy things — dirty minds! — but to me sex is sex, and triangles are triangles.”
. . .
Ms. Herrera’s late-in-life success has stunned her in many ways. Her larger works now sell for $30,000, and one painting commanded $44,000 — sums unimaginable when she was, say, in her 80s. “I have more money now than I ever had in my life,” she said.
Not that she is succumbing to a life of leisure. At a long table where she peers out over East 19th Street “like a French concierge,” Ms. Herrera, because she must, continues to draw and paint. “Only my love of the straight line keeps me going,” she said.

For the full story, see:
DEBORAH SONTAG. “At 94, She’s the Hot New Thing in Painting, and Enjoying It.” The New York Times, First Section (Sun., January 20, 2010): 1 & 29.
(Note: the online version of the article has the title “At 94, She’s the Hot New Thing in Painting” and is dated January 19, 2010.)

Ms. Herrara’s “”Blanco y Verde” (1966-7).”

“Ms. Herrera’s “Red Star” from 1949.”

Source of captions and photos: online version of the NYT article quoted and cited above.

Kroc Increased the Mortgage on His Home to Regain Control of His First Entrepreneurial Venture

Ray Kroc was the founder of the McDonald’s chain, who wrote an autobiography called Grinding It Out. Back on August 12, 2009, I made a few comments on the book, and said that in some future entries, I would be quoting a few passages that I thought were worth remembering.
Well, the future has finally arrived.
Kroc’s first entrepreneurial venture was Multimixer, a machine that efficiently made milkshakes. Kroc had sold a controlling interest, and wanted control back:

(p. 56) “All right,” I said, “how much?”

I don’t know how he kept from choking on his own bile as he mouthed the figure: “Sixty-eight thousand dollars.”
That’s all I remember of our conversation. I’m sure I said something. But I was so benumbed by his outrageous demand that I couldn’t think straight. To add acid to the irony, he wanted the whole thing in cash. Of course, I didn’t have that kind of (p. 57) money. So what we worked out was the culmination of the devilish deal he had tied me to. I had to agree to pay him $12,000 cash. The balance was to be paid off over five years, plus interest. My salary had to remain at the same level and my expenses in the same range. So, in fact, what I was doing was paying him the profits of my company.
I didn’t know where in the hell I was going to raise the money, but I had made up my mind to do it. In the end, most of the cash came from my new home in Arlington Heights. I managed to get an increase in the mortgage, much to Ethel’s dismay. Her apprehensions about my becoming Mr. Multimixer had been laid to rest at this point, and I don’t think she ever got over the shock of discovering that we were nearly $100,000 in debt. She couldn’t seem to handle it.
For me, this was the first phase of grinding it out— building my personal monument to capitalism. I paid tribute, in the feudal sense, for many years before I was able to rise with McDonald’s on the foundation I had laid.

Source:
Kroc, Ray. Grinding It Out: The Making of McDonald’s. Chicago: Henry Regnary Company, 1977.

EU’s Farm Subsidy Program Creates Fraud and High Prices

Source of the table: online version of the NYT article quoted and cited below.

(p. B1) Call it the mystery of the European sugar triangle.

It began when Belgian customs officials examined shipping records for dozens of giant tanker trucks that outlined an odd, triangular journey across Europe. The trucks, each carrying 22 tons of liquid sugar, swung through eight nations and covered a driving distance of roughly 2,500 miles from a Belgian sugar refinery to Croatia and back — instead of taking the most direct, 900-mile route.
Along the way the trucks made a brief stop in Kaliningrad, a grim and bustling Russian border checkpoint on the Baltic Sea.
Suddenly the sugar triangle made sense to them. Because Russia, and not Croatia, was listed as the intended destination, the shipments qualified for valuable special payments known as export rebates from the European Union’s farm subsidy program.
Some 200 shipments roared along this route over a three-year-period, investigators say, earning 3 million euros in refunds (about $4.5 million) for the Belgian sugar maker Beneo-Orafti. In the spring, dozens of Belgian and European investigators raided the company’s offices, freezing half of its refunds and initiating an investigation that could cost the company the remaining 1.5 million euros, and possibly more.
In the sprawling European subsidy program — which lavishes more than 50 billion euros ($75 billion at current exchange rates) a year in agricultural aid — no commodity is more susceptible to fraud, chicanery and rule-bending, experts say, than simple household sugar.
(p. B4) Across Europe there are some 2.5 million acres of beet fields that will produce 16.7 million metric tons of sugar this year for an industry worth 7 billion euros. Last year the European Union spent 475 million euros in price supports for sugar, including export subsidies. Then it spent another 1.3 billion euros on restructuring aid to reform a subsidy regime so lavish that it even prompted cold-weather Finland to start producing more sugar.
Sugar producers across the Continent cashed in — from Italy, where Italia Zuccheri collected more than 139 million euros, to France, where a handful of sugar producers received 128.5 million.
With this much money at stake, critics and some analysts say, the sugar subsidy system is like a cookie jar waiting to be pilfered.
. . .
“There’s a whole world of commercial fraud, which goes under the radar for most people,” said James Byrne, a law professor at the George Mason University School of Law in Virginia who has studied the global sugar trade. “It is a parallel universe that mimics the real world of commerce and finance.”

For the full story, see:
STEPHEN CASTLE and DOREEN CARVAJAL. “Subsidies Spur Fraud In European Sugar.” The New York Times (Tues., October 27, 2009): B1 & B4.
(Note: the online version of the article has the title “Fraud Plagues Sugar Subsidy System in Europe” and has the date October 26, 2009. The online version reverses the order of the authors’ names, and differs significantly in the first several paragraphs, mainly stylistically, but also somewhat in substance. The version quoted here is the online version.)
(Note: ellipsis added.)

Source of both the map and the table: online version of the NYT article quoted and cited above.

Venture Capitalists Invested 37% Less in Start-Ups in 2009

(p. B5) Venture capitalists, whose money provides fuel to technology start-ups, last year invested the lowest amount in such companies since 1997, according to a report from PricewaterhouseCoopers and the National Venture Capital Association released on Friday.
. . .
In 2009, venture capitalists invested $17.7 billion in 2,795 start-ups — 37 percent less cash and 30 percent fewer deals than in 2008. Internet companies, which have excited investors for more than a decade, took a big hit as investment declined 39 percent.

For the full story, see:
CLAIRE CAIN MILLER. “Venture Capital Was Tight for Tech Start-Ups in ’09.” The New York Times (Fri., January 22, 2010): B5.
(Note: ellipsis added.)

In Creative Destruction, Firms Survive that Have Technological Expertise Useful for New Product

“Collection of Studebaker National Museum, South Bend, Ind.” “Those who disparage buggies as a dead end forget Studebaker switched from carriages to cars.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 4) I spoke recently about buggy whips with Thomas A. Kinney, an assistant professor of history at Bluefield College in Virginia and author of “The Carriage Trade: Making Horse-Drawn Vehicles in America.”

There were 13,000 businesses in the wagon and carriage industry in 1890, Mr. Kinney said. A company survived not by conceiving of itself as being in the “personal transportation” business, but by commanding technological expertise relevant to the automobile, he said. “The people who made the most successful transition were not the carriage makers, but the carriage parts makers,” he said, some of whom are still in business.
One is the giant Timken Company, whose signature products, roller bearings, were first used in wagon wheels in the 1890s. They easily adapted to the automobile because they could be applied “to nearly anything that moved,” Mr. Kinney wrote.
Westfield, Mass., still known as “Whip City,” once had more than 40 businesses that made whips, tools and carriage parts. Today, only Westfield Whip Manufacturing, founded in 1884, remains. Although it produces buggy whips — now called carriage whips — most of its whips and crops, called “bats,” are for equestrian activities like dressage and jumping.
Buggy whips, with their long, rigid handles and flexible end lashes, were created by braiding fiber around a hard core and had no automotive analog.
The carriage makers did, and they tried their best to remake themselves into automakers. But they were expert woodworkers without expertise in precision metalworking, Mr. Kinney said: “Bicycle manufacturers were actually better suited for auto manufacturing than were carriage makers.”
Businesses do die, even big ones. Leslie Hannah, a visiting professor of economic history at the London School of Economics, studied the 100 largest industrial companies in the world between 1912 and 1995. Almost half of them disappeared, “and more than a quarter experienced bankruptcy or a similar close shave with it,” he wrote in “Learning by Doing in Markets, Firms and Countries.”
The standout carriage business that succeeded was the Studebaker Brothers Manufacturing Company, which began as a blacksmith shop in 1852 and had the financial resources to acquire smaller companies that supplied it with the precision metalworking expertise it lacked when it decided to enter the auto business. In 1913, its automobile production was second only to that of Ford Motor.

For the full story, see:
RANDALL STROSS. “Digital Domain; Failing Like a Buggy Whip Maker? Better Check Your Simile.” The New York Times, SundayBusiness Section (Sun., January 10, 2010): 4.
(Note: the online version of the article is dated January 9, 2010.)
(Note: bold added.)

Entrepreneur Kurzweil Brought Sunshine to Stevie Wonder’s Life

(p. 265) On the snowy morning of January 13, 1976, . . . , there was unusual traffic on Rogers Street. Outside the gray one-story buildings with their clouded tilt-out windows, vans from various television channels maneuvered to park. A man from the National Federation of the Blind struggled over a snow bank onto the sidewalk and began tapping earnestly to get his bearings. A dark-haired young man set out on a three-block trek to the nearest vendor of coffee and donuts for the gathering media. In the room at number 68, two engineers poked at a gray box that looked like a mimeograph machine sprouting wires to a Digital Equipment Corporation computer. Several intense young men in their early twenties debated when to begin a demonstration of the device. The short, curly-haired leader of the group, twenty-seven-year-old Raymond Kurzweil, refused to start until the arrival of a reporter from The New York Times.

The event was a press conference announcing the first breakthrough product in the field of artificial intelligence: a reader for the blind. Described as an “omnifont character recognition device” linked to a synthetic voice, the machine could read nearly any kind of book or document laid face down on its glass lens. With a learning faculty that improved the device’s performance as it proceeded through blurred, faded, or otherwise illegible print, the machine solved problems of pattern recognition and synthesis that had long confounded IBM, Xerox, and the Japanese conglomerates, as well as thousands of university researchers.

. . .
(p. 266) Stevie Wonder, the great blind musician, called. He had heard about the device after its appearance on the “Today Show” and it seemed a lifelong dream come true. He headed up to Cambridge to meet with Kurzweil.

. . .
As Kurzweil remembers, “He was very excited about it and wanted (p. 267) one right away, so we actually turned the factory upside down and produced a unit that day. We showed him how to hook it up himself. He left with it practically under his arm. I understand he took it straight to his hotel room, set it up. and read all night.” As Wonder said, the technology has been “a brother and a friend . . . . without question, another sunshine of my life.” Wonder stayed in touch with Kurzweil over the years and would play a key role in conceiving and launching a second major Kurzweil product.

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.
(Note: italics in original; all ellipses added except the ellipsis internal to the last paragraph, which was in the original.)